CarMax (KMX) Stock Forecast & Price Target

CarMax demonstrated resilient financial performance, with 4QFY26 revenue expectations of $5.7 billion, reflecting only a modest year-over-year decline of 5%, supported by an improvement in diluted GAAP EPS. Additionally, CarMax's CAF (CarMax Auto Finance) income grew by 9% year-over-year to $175 million, indicating strong performance in financing operations, which is critical for overall profitability. Furthermore, the increasing penetration of CAF, alongside solid sales of older, higher-mileage vehicles—which accounted for over 40% of quarterly sales—exemplifies the company's strategic strengths and ability to capture market share, reinforcing a positive outlook for the stock.

CarMax's retail unit sales declined by 8.0% year-over-year, with used unit comps dropping by 9%, exceeding management's guidance of a decline between 8% to 12%. While retail average selling price (ASP) was slightly above expectations at $26.4K, retail gross profit per unit decreased by 3% year-over-year to $2.2K, which poses pressure on overall profitability. Additionally, the company faces near-term earnings challenges due to identified inefficiencies in its go-to-market strategy, including price gaps and difficulties in the digital customer experience, impacting its ability to increase market share effectively.